Address by International Trade Minister Chrystia Freeland at the Conference of Montreal
June 15, 2016 – Montréal, Quebec
Check against delivery. This speech has been translated in accordance with the official languages policy and edited for posting and distribution in accordance with the Government of Canada’s communications policy.
Thank you very much, all, for that kind introduction. Thanks, everyone, for being here.
I’m very, very happy to have the opportunity to address you this morning. Trade is part of Canada’s history. We are a trading nation. International trade is essential to economic growth and prosperity, to improved living standards and to the growth and success of businesses. It’s through trade that we create good-paying middle-class jobs across Canada.
Our government has undertaken to do free and progressive trade. This may seem to be an abstract concept, but over the coming months and years, you will see how this will become a reality for Canadians, starting with the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union. CETA clearly demonstrates that business development can be achieved in an inclusive and progressive way.
And that’s really what I want to devote most of my remarks to today. I want to talk about what we are calling in our government a progressive trade agenda, and this is something that we are developing. It’s an important policy for Canada. We’re developing it together with our partners in Europe and around the world. I was talking about a Pacific Alliance, which Canada was proud to join as the first partner in Mexico City last week. CETA is an essential first step in developing this agenda, and I’ll talk about that in a minute.
But first, I’d like to explain a little bit why I think that now is a moment when it is so essential to have a progressive trade agenda, why we need it so badly. The reality is, and it is a reality that can sometimes be forgotten in a friendly, preaching-to-the-converted room like this one, we are living in a profoundly protectionist period—I think probably the most protectionist climate internationally in my lifetime. We’re seeing these waves of protectionism in Europe. We’re seeing them south of the border.
And I believe that this protectionist wave that we’re experiencing is part of a broader resentment of, an attack on what you might call the open society. It’s part of a broader desire to, you know, as some people discuss, to be building walls, to be closing borders, to be shutting down, to be hostile to immigrants, to be hostile to trade. It’s all of one piece. This is a really, really dangerous political trend, and we are seeing it, by the way, both on the populist right and on the populist left.
Canada believes profoundly in what I like to call the open society. We are a country that is deeply open to immigration. My own mother was born in a refugee camp in Europe. We’re a country which is deeply open to international trade and international commerce, but to defend these values, to defend the open society, I think it’s tremendously important not just to speak to the converted, not just to talk to ourselves, but to really understand how powerful that protectionist wave is, how powerful that, you know, building walls, looking inward wave is, to understand what the public anxieties are that are driving it and to develop ways to respond.
Broadly speaking, what is going on is the middle class in western industrial societies and, probably more broadly, in middle income countries, has begun to fear very profoundly that the two great economic transformations of our time—globalization and the technology revolution—may have been good for a narrow elite, a small group of people, that currently much-reviled establishment that we’re hearing attacked in political debates all over the world, but that they haven’t been good for most people, that they haven’t been good for the middle class and people who are working hard to join it.
And you know what? The people who feel that, who have this sort of inchoate anger, who say, “You know, it’s not working for me,” they’re not wrong. I was a journalist before I became a politician. The last big work that I did was a book about income distribution, particularly in the winner-take-all economy, and the reality, if you look at the data, is, across the western industrialized world over the past 30 years, we have seen a winner-take-all economy, a winner-take-all income distribution. We’ve seen gains very much concentrated at the very top, in the top one percent or even 0.1 percent, and we have seen a broad stagnation of middle-class wages and wealth. That’s what people are responding to. People’s fears are based on something real.
Now this broad anxiety, concern that my children will not live as well as I have, as I am, that it’s just not possible to get ahead, that the rules of the game are rigged against me, this is an anxiety about some very, very deep forces. It’s an anxiety about the technology revolution. It’s an anxiety about globalization. But I don’t think we should be surprised that it is tending to manifest itself very specifically in hostility to trade and hostility to immigration.
The fact is there are no 21st century Luddites. We all love our iPhones too much. I’m Canadian; I actually have two BlackBerries—we love our BlackBerries too much too. So that’s not where the anger is directed. The anger is directed at the easy targets of trade, of immigrants. The anger is directed at borders and the feeling is, you know, things are happening. It’s not working for me. I’m losing out, so let’s just close the border. And as we are discovering, I think very worryingly, there are not a few politicians in remarkably prominent roles who are finding an opportunity to real political success by capitalizing on those worries and saying, “Let’s just go it alone.” That’s incredibly dangerous.
So how do we fight back? How do we push back against this protectionist environment, against this hostility to globalization and technology revolution? I think a really important piece is what we do domestically. Now more than ever, governments have to work hard in their domestic policies at shoring up the middle class.
And so that’s why we are investing in infrastructure for jobs and growth. We know it is essential to get the economy going again, and we know that those investments create good, middle-class jobs right now.
It’s why we have beefed up the support that the middle class gets. The thing I am the proudest of is the beefed up child benefit, which amounts to a guaranteed annual income for the poorest children in Canada. The poorest children in Canada – well, the kids themselves don’t get this. The people who take care of them are going to get now a tax-free cheque for $6,000 a year. That’s not a lot, but it’s enough to take a child out of poverty. That is really important. We’ve cut taxes for the middle class, and we’re paying for that, yes, by raising taxes a little bit on the one percent.
Why do I think these domestic policies for supporting the middle class and people at the bottom are so important? If you want domestic support for an open society, your government has to work hard to make sure your middle class feels as secure as possible at home.
I’m the Trade Minister, as you may have heard, so I’ve been travelling around the world a lot. And one of the things I get asked is, you know, how do you account for this Canadian miracle? You know, why is it you guys – you know, you’re a liberal government, you’re a government of the centre left, but you’re in favour of free trade and your country loves immigrants.
You know, I tell this story, and it’s actually a true story. When I do my constituency hours, the single biggest complaint I am getting right now is from private groups in my riding who have come together to sponsor Syrian refugees and who do not have their refugees yet. And they’re quite – I mean they’re polite—they’re Canadian—but they’re quite frustrated with me and the government that they do not have their refugees yet. This is a real issue for us.
I was in Europe quite a bit over the past couple of months talking about CETA, and when I talked about this, European leaders didn’t actually believe me. They said, “People come to your office and they say ‘Please get my Syrian refugee to Canada’ and they criticize your government that it’s not happening quickly enough?” And I said, “Yeah, it’s absolutely true.” I ended up having to go into my briefcase and pull out a letter complaining about this, and I showed it to Sigmar Gabriel, the Vice-Chancellor of Germany, who was like, “Wow, the Canadians, how do you do this?”
I really believe an essential part of the support we have in Canada for the open society is because of the support our middle class feels – the economic support it has from its government here.
A second thing we can do—and this part is my job—is develop what I call a progressive trade agenda, progressive trade policy, which addresses some of the legitimate concerns that people have about globalization and says we can do trade, we can have an open society, we can have borders in a way which supports everyone.
You know, the concern, and I hear this a lot because we, as a government, believe very much in consultation and in talking to people, the concern that people have, they may not have read all 2,000 pages of the latest trade agreement, and these are very, very complicated documents now, but broadly speaking, the concern people have about trade is that trade today is being done to serve the interests of big multinational corporations and that everybody else gets left behind. That’s the worry, that’s the fear. It manifests itself in all kinds of different specific complaints, but that’s really what people are talking about, that, you know, like these other big forces of the past 30 years, like globalization and technology revolution overall, this is going to help the elite, the establishment, but it’s not going to help me. In fact, I might lose my job because of it.
What we need to do to build public support for trade is to be sure that when we are talking about trade agreements, but also when we are crafting them, we are crafting agreements that genuinely serve society as a whole, agreements that have a real focus on and offer real opportunities to small and medium-sized businesses to engage in the global economy right away. And by the way, now, 2016, is a better time than ever to do that. Now is a moment when a company can go global immediately.
I was speaking recently to one of the great Canadian success stories, Tobi Lütke, the founder of Shopify, the great Ottawa tech startup, and he told me that he got his first Canadian customer a year after founding the company. So trade really is for all companies. It’s for young companies. It’s for companies just getting started, and we have to be sure that that’s how we talk about it and also how we do it.
But we also have to now start building into trade agreements real effective labour protections, environmental standards and ensure that that is as much a part of the trade agreement as protections for investors. And this is where CETA is such an important step forward for Canada, for Europe and for the world. This is an agreement that I am incredibly proud of. It is really a gold-standard agreement, and I think that it is going to set a new sort of high-water mark in how we do trade internationally.
There are very strong labour and environmental protections in CETA, but the key element which we changed and which I think is the key to the passage of CETA through Europe, through the Council and ultimately through the European Parliament, are the changes which we’ve made to the investment chapter of CETA. These are really key, partly for political reasons. I’m a politician, so I’m not afraid of using that word. Investment chapters in trade agreements have become extremely controversial, partly because they play precisely into this fear that trade agreements are about imposing the will of multinational companies and are not about actually opening up economic opportunity for everyone.
What we’ve done with CETA is two absolutely new and really important things. The first is to strengthen more than it has ever been done before the state’s right to regulate, to say this agreement does not supercede the rights of democratically elected governments to regulate anywhere, but particularly in areas of health, the environment and labour. That’s a really important step. It brings the investment chapter back to first principles, which was to ensure non-discrimination against foreign investors. And that is really, really key.
The second thing that we’ve done with the investment chapter is to create a brand new, much more transparent, much more ethical, much more objective arbitration process with a roster of arbiters who are independent from private practice. And again, that is a really essential step.
So I am already seeing the results of this progressive trade policy. CETA was controversial in Europe prior to these changes. We now have strong support from the European centre left. Sigmar Gabriel, the head of the SPD, Vice-Chancellor of Germany, has now come out strongly in favour. François Hollande likewise. And the reason is that this is now an agreement that progressive politicians can stand behind and can actually say this is not only a good deal, it’s an essential step on a path forward towards a progressive trade agenda.
We’re talking now about these progressive ideas that we have in CETA and developing a progressive trade agenda more broadly with our other partners. I see President Lagos Escobar is here. We’re talking with our Chilean partners about it, Heraldo Muñoz. We’re modernizing our agreement. We’re talking with our other Pacific Alliance partners.
So this is what I think – I think we all need to be worried about protectionism and we need to do more than get together with fellow free traders and wring our hands and say everybody else is crazy, oh, woe is us. We need to have a positive agenda that addresses some of those fears. Canada is really proud to be taking a leadership role in developing that progressive agenda and I hope you’ll join me in elaborating it. Thank you very much.
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